Providence Health Plan v. Charriere et al, No. 3:2008cv00872 - Document 50 (D. Or. 2009)
Court Description: Opinion & Order: Granting in Part and Denying in Part Defendant's Motion for Summary Judgment 32 ; Granting in Part and Denying in Part Plaintiff's Motion for Summary Judgment 33 . Signed on October 13, 2009 by Magistrate Judge Dennis J. Hubel. (hubel2, )
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1 2 3 4 5 6 7 8 9 IN THE UNITED STATES DISTRICT COURT 10 FOR THE DISTRICT OF OREGON 11 12 13 14 15 16 17 PROVIDENCE HEALTH PLAN, an ) Oregon nonprofit corporation, ) ) Plaintiff, ) ) v. ) ) LINDA L. CHARRIERE, ) ) Defendant. ) ) 19 Attorneys for Plaintiff 21 OPINION & ORDER Arden J. Olson John A. Riherd HARRANG LONG GARY RUDNICK P.C. 1001 S.W. Fifth Avenue, 16th Floor Portland, Oregon 97204 20 No. CV-08-872-HU Paul H. Krueger PAUL KRUEGER LAW FIRM, PC 4380 SW Macadam Avenue, Suite 310 Portland, Oregon 97239 18 22 23 Attorney for Defendant Charriere 24 HUBEL, Magistrate Judge: 25 Plaintiff Providence Health Plan brings this ERISA and breach 26 of contract action against defendant Linda Charriere. Both parties 27 move for summary judgment. 28 1 - OPINION & ORDER 1 The parties have consented to entry of final judgment by a 2 Magistrate Judge in accordance with Federal Rule of Civil Procedure 3 73 and 28 U.S.C. § 636(c). 4 each motion in part. I grant each motion in part, and deny 5 BACKGROUND 6 Plaintiff is an Oregon non-profit corporation, licensed by the 7 State of Oregon as a health care service contractor under Oregon 8 Revised Statutes Chapter 750. 9 Defendant was injured in a car accident on July 11, 2007. The 10 operator of the other car, Michael Arthur, was at fault. Defendant 11 was a member of plaintiff at the time of the accident, having 12 obtained coverage with plaintiff through her husband's employer's 13 group plan provided through the Harrison Electrical Workers Trust. 14 The group health contract provided by plaintiff is an ERISA 15 health and welfare plan. 16 that term is used in ERISA. 17 Plaintiff is a fiduciary of the plan as Plaintiff has paid $243,863.85 for defendant's medical and 18 hospital expenses associated with this accident. 19 recovered $100,000 from State Farm Insurance, representing $50,000 20 from State Farm in underinsured motorist coverage (UIM) under 21 defendant's policy with State Farm, and $50,000 from State Farm in 22 third party liability coverage insurance because State Farm was 23 Arthur's insurer. 24 Defendant has The funds paid to defendant by State Farm have been deposited 25 in trust by defendant's attorney. 26 plaintiff any amount either directly or from the settlement funds 27 received and deposited with her attorney. 28 Defendant has failed to repay On October 29, 2007, plaintiff, through its representative 2 - OPINION & ORDER 1 Kathleen Warren, wrote to State Farm regarding Arthur. 2 Depo. Exh. 101, attached as unnumbered exhibit to Deft's CSF in 3 Sup. of Deft's MSJ. 4 Revised Statute § (O.R.S.) 742.534 required an authorized motor 5 vehicle liability insurer, whose insured is or would be held 6 legally 7 directly for the benefits the health insurer has furnished, if 8 requested to do so by the health insurer. liable for Warren There, Warren notified State Farm that Oregon damages, to reimburse the health insurer Id. 9 Warren stated that the letter "will serve as Providence Health 10 Plan's demand under that statute for direct insurer to insurer 11 reimbursement." 12 the "lien" at that time, and included an itemized ledger. 13 noted that if State Farm intended to dispute liability or medical 14 causation, to please advise her as soon as possible. 15 requested that she be contacted before State Farm made any final 16 settlement agreement so that she could provide a final summary of 17 any payments made for the injury. 18 plaintiff's interest was protected, Warren requested that State 19 Farm issue a separate draft to plaintiff for the payments plaintiff 20 had made. 21 Id. Warren informed State Farm of the amount of Id. Id. Id. She She also Finally, to ensure that Id. On December 31, 2007, State Farm claim representative Lisa 22 McAlpine wrote to defendant regarding Arthur. 23 Resp. to Pltf's CSF. 24 not concluded defendant's bodily injury claim, and thus, State Farm 25 was unable 26 liability policy limits of $50,000" because it was waiting for 27 additional information from plaintiff. 28 a telephone message was left on December 31, 2007, "for a status on to McAlpine stated that to date, State Farm had "issue 3 - OPINION & ORDER Exh. A to Deft's our settlement draft Id. for our insured's McAlpine stated that 1 behalf of the lien that has been filed against our insured's 2 Liability Coverage" for Providence Health Plan payments. 3 then stated that a release was sent to defendant on September 4, 4 2007, for the limit offer of $50,000. 5 continued, until the lien information was concluded, any drafts 6 payable under State Farm's liability policy would also include the 7 medical providers who had filed those liens. 8 9 In concluding, understood that McAlpine defendant told was Id. for She However, the letter Id. defendant waiting Id. that the State Farm conclusion of 10 defendant's health carrier's decision on any possible reduction of 11 its lien and thus, State Farm would continue its follow-up with the 12 health carrier for "a status" of the matter. Id. 13 In a second letter from plaintiff to State Farm dated February 14 5, 2008, Warren referred to State Farm's insured Linda Charriere, 15 and noted the claim for UIM. 16 unnumbered exhibit to Deft's CSF in Sup. of Deft's MSJ. 17 Warren stated that the letter served as plaintiff's demand under 18 O.R.S. 742.534 for direct insurer-to-insurer reimbursement for the 19 underinsured claim in the amount of $50,000. 20 a check be issued to plaintiff for a portion of the $50,000 21 underinsured claim, in the amount of $44,000. 22 self-addressed stamped envelope and asked that it be sent to 23 Warren's attention. 24 check be sent directly to defendant. 25 amounts should exhaust the limits of the underinsured claim. Id. Warren Depo Exh. 104, attached as Id. Id. There, She asked that She enclosed a She also asked that a separate $6,000 Id. She noted that the two Id. 26 On the same date, February 5, 2008, Warren wrote to defendant 27 to tell her that according to information received from defendant's 28 physicians, defendant's injuries had healed and that the only noted 4 - OPINION & ORDER 1 future concern was a possible limit of activity and limit in 2 walking speed. 3 exhibit to Deft's CSF in Sup. of Deft's MSJ. 4 that she wanted to provide defendant with details of plaintiff's 5 proposed offer of settlement of its subrogation lien with State 6 Farm. Id. 7 bodily injury 8 underinsurance with insured defendant. 9 that Warren Depo. Exh. 103, attached as unnumbered Warren told defendant Warren explained that State Farm had $50,000 in a policy plaintiff's with current insured medical Arthur, and $50,000 in Warren then told defendant lien was $242,018.15, which 10 exceeded the $100,000 available under the State Farm policies. Id. 11 She asserted that it was plaintiff's right to keep the entire 12 $100,000 which would allow plaintiff to recover a portion of its 13 loss, leaving plaintiff with $142,018.15 in losses. 14 Id. Warren further wrote that plaintiff had no obligation to allow 15 defendant to recover any out of pocket losses. 16 was going to allow defendant $6,000 to offset certain expenses for 17 gasoline, a ramp, and pharmacy co-payments. 18 defendant 19 exclusion for future related medical claims[,] an exception will be 20 made to allow for continued care and medical treatment related to 21 injuries sustained from your motor vehicle accident of 7/11/07." 22 Id. 23 subrogation settlement with State Farm and will ask them to issue 24 and mail directly to you a separate check in the amount of $6,000." 25 Id. that Warren because then plaintiff's stated that policy "[w]e are However, plaintiff Id. Warren informed "language in the has process an of 26 In her declaration submitted in support of plaintiff's motion 27 for summary judgment, Warren states that defendant asserted a claim 28 against Arthur. Warren Declr. at ¶ 8. 5 - OPINION & ORDER There is no information 1 about when that claim was made. There is no evidence in the record 2 that defendant ever notified plaintiff that defendant was making a 3 claim, or instituting a legal action, as a result of the accident. 4 STANDARDS 5 Summary judgment is appropriate if there is no genuine issue 6 of material fact and the moving party is entitled to judgment as a 7 matter of law. 8 initial responsibility of informing the court of the basis of its 9 motion, and identifying those portions of "'pleadings, depositions, 10 answers to interrogatories, and admissions on file, together with 11 the affidavits, if any,' which it believes demonstrate the absence 12 of a genuine issue of material fact." 13 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)). Fed. R. Civ. P. 56(c). The moving party bears the Celotex Corp. v. Catrett, 14 "If the moving party meets its initial burden of showing 'the 15 absence of a material and triable issue of fact,' 'the burden then 16 moves to the opposing party, who must present significant probative 17 evidence tending to support its claim or defense.'" Intel Corp. v. 18 Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir. 1991) 19 (quoting Richards v. Neilsen Freight Lines, 810 F.2d 898, 902 (9th 20 Cir. 1987)). 21 designate facts showing an issue for trial. 22 322-23. 23 The nonmoving party must go beyond the pleadings and Celotex, 477 U.S. at The substantive law governing a claim determines whether a 24 fact is material. T.W. Elec. Serv. v. Pacific Elec. Contractors 25 Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). 26 to the existence of a genuine issue of fact must be resolved 27 against the moving party. 28 Radio, Matsushita Elec. Indus. Co. v. Zenith 475 U.S. 574, 587 (1986). 6 - OPINION & ORDER All reasonable doubts as The court should view inferences 1 drawn from the facts in the light most favorable to the nonmoving 2 party. T.W. Elec. Serv., 809 F.2d at 630-31. 3 If the factual context makes the nonmoving party's claim as to 4 the existence of a material issue of fact implausible, that party 5 must come forward with more persuasive evidence to support his 6 claim than would otherwise be necessary. 7 Research and Tech. Group, 916 F.2d 528, 534 (9th Cir. 1990); 8 California Architectural Bldg. Prod., Inc. v. Franciscan Ceramics, 9 Inc., 818 F.2d 1466, 1468 (9th Cir. 1987). 10 11 Id.; In re Agricultural DISCUSSION I. Relevant Portions of the Plan 12 Plaintiff cites to four separate provisions in the plan 13 supporting its right to recover the monies paid by State Farm to 14 defendant: Sections 8.4, 8.4.1, 8.4.2, and 8.4.3. They provide as 15 follows: 16 8.4 THIRD-PARTY LIABILITY/SUBROGATION 17 The following provisions will apply when You have received Services for a condition for which one or more third parties may be responsible. "Third party" means any person other than You (the first party to this Contract), and Providence Health Plan (the second party), and includes any insurance carrier providing liability or other coverage potentially available to You. For example, uninsured or underinsured motorist coverage, whether under Your policy or not, is subject to recovery by Us as a third-party recovery. Failure by You to comply with the terms of this section will be a basis for Us to deny any claims for benefits arising from the condition or to terminate Your coverage under this Group Contract as specified in section 10.2. In addition, You must execute and deliver to Us or other parties any document requested by Us which may be appropriate to secure the rights and obligations of You and Providence Health Plan under these provisions. 18 19 20 21 22 23 24 25 26 27 8.4.1 Third-Party Affects You 28 Third party liability refers to claims that are the 7 - OPINION & ORDER Liability/Subrogation and How it 1 2 3 4 5 6 7 responsibility of someone besides Providence Health Plan or You. Examples of third-party liability are motor vehicle accidents, workplace accidents, injury or illness, or any other situation involving injury or illness, including wrongful death, in which You or Your heirs, beneficiaries or relatives have a basis to bring a lawsuit or to make a claim for compensation against any person or for which You or Your heirs, beneficiaries or relatives may receive a settlement. Once it has been established that the third party is responsible to pay and is capable of paying for the expenses for the Services caused by that third party, We will not provide benefits for the Services arising from the condition caused by that third party. 8 9 10 11 12 13 14 If We make claim payments on Your behalf for which a third party is responsible, We are entitled to be repaid for those payments out of any recovery from the third party. We will request reimbursement from You or Your heirs, beneficiaries or relatives to the extent the third party does not pay Us directly, and We may request refunds from the medical providers who treated You, in which case those providers will bill You for their Services. "Subrogation" means that We may collect directly from the third party to the extent We have paid on Your behalf for third-party liabilities. Because We have paid for Your injuries, We, rather than You, are entitled to recover those expenses. 15 . . . 16 8.4.2 Proceeds of Settlement or Recovery 17 18 19 20 21 22 23 To the fullest extent permitted by law, We are entitled to the proceeds of any settlement or any judgment that results in a recovery from a third party, whether or not responsibility is accepted or denied by the third-party for the condition. We are entitled up to the full value of the benefits provided by Us for the condition, calculated using Our UCR charges for such Services, less the Member's out of pocket expenses. Prior to accepting any settlement of Your claim against the third party, You must notify Us in writing of any terms or conditions offered in settlement and shall notify the third party of Our interest in the settlement established by this provision. 24 25 26 27 You must cooperate fully with Us in recovering amounts paid by Us. If You seek damages against the third party for the condition and retain an attorney or other agent for representation in the matter, You must agree to require Your attorney or agent to reimburse Us directly from the settlement or recovery an amount equal to the total amount of benefits paid. 28 8 - OPINION & ORDER 1 2 3 4 5 6 7 You must complete Our subrogation trust agreement by which You and/or Your attorney or agent agrees to reimburse Us directly from the funds of the settlement or recovery. We will withhold benefits for Your condition until a signed copy of this agreement is delivered to Us. The agreement must remain in effect and We will withhold payment of benefits if, at any time, Your authorization or the agreement should be revoked. While this document is not necessary for Us to exercise Our rights to subrogation, it serves as a reminder and confirmation of Our rights to each of the parties involved. 13 To the maximum extent permitted by law, We are subrogated to Your rights against any third party who is responsible for the condition, have the right to sue any such third party in Your name, and have a security interest in and lien upon any recovery to the extent of the amount of benefits paid by Us and for Our expenses in obtaining a recovery. If You should either decline to pursue a claim against a third party that We believe is warranted or refuse to cooperate with Us in any third party claim that you do pursue, We have the right to pursue such claim directly, including commencing a legal action against such third party or intervening in any action that You have commenced. 14 8.4.3. Suspension of Benefits and Reimbursement 15 After You have received proceeds of a settlement or recovery from a third party, You are responsible for payment of all medical expenses for the continuing treatment of the illness or injury that Providence Health Plan would otherwise be required to pay under this Group Contract until all proceeds from the settlement or recovery have been exhausted. 8 9 10 11 12 16 17 18 19 20 21 22 23 24 25 26 27 28 If You continue to receive medical treatment for the condition after obtaining a settlement or recovery from one (1) or more third parties, We are not required to provide coverage for continuing treatment until You prove to Our satisfaction that the total cost of the treatment is more than the amount received in settlement or recovered from the third party, after deducting the cost of obtaining the settlement or recovery. We will only cover the amount by which the total cost of benefits that would otherwise be covered under this Group Contract, calculated using Our UCR charges for such Services, exceeds the amount received in settlement or recovery from the third party. We are entitled to reimbursement from any settlement or recovery from any third party even if the total amount of such settlement or recovery does not fully compensate You for other damages, including lost wages or pain and suffering. Any settlement arising out of an injury or illness covered by this Group Contract will be deemed first to compensate You for Your 9 - OPINION & ORDER 1 medical expenses, regardless of any allocation of proceeds in any settlement document that We have not approved in advance. In no event shall the amount reimbursed to Us be less than the maximum permitted by law. 2 3 4 Exh. 1 to Compl. at pp. 44-46. 5 II. ERISA Claim 6 ERISA authorizes fiduciaries to bring suit in federal court 7 for "appropriate equitable relief" to remedy violations of a plan 8 or to enforce its provisions. 9 Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002), 10 the Supreme Court explained that "equitable relief," as referred to 11 in this portion of the statute, "must mean something less than all 12 relief." 13 The 14 "equitable relief" referred to "those categories of relief that 15 were 16 quotation and emphasis omitted). 17 29 U.S.C. § 1132(a)(3)(B). In Id. at 209 (internal quotation and emphasis omitted). Court noted typically that it available had in previously equity." held Id. at that 210 the term (internal Here, plaintiff seeks the imposition of a constructive trust 18 against defendant. 19 Great-West recognizes this as an allowable claim under section 20 1132(a)(3)(B): 21 22 23 24 25 Compl. at ¶¶ 20 (incorporating ¶¶ 1-19), 21. In contrast, a plaintiff could seek restitution in equity, ordinarily in the form of a constructive trust or an equitable lien, where money or property identified as belonging in good conscience to the plaintiff could clearly be traced to particular funds or property in the defendant's possession. . . . A court of equity could then order a defendant to transfer title (in the case of the constructive trust) or to give a security interest (in the case of an equitable lien) to a plaintiff who was, in the eyes of equity, the true owner. 26 Id. at 213. 27 Great-West established four criteria for a proper equitable 28 10 - OPINION & ORDER 1 action for constructive trust under section 1132(a)(3)(B): (1) the 2 defendant 3 disputed funds must not have been dissipated; (3) the party seeking 4 equitable 5 liability on the opposing party; and (4) the money or property at 6 issue must be identifiable and must belong in good conscience to 7 the party seeking relief. 8 Med. Servs, Inc., 547 U.S. 356, 362-63 (2006) (discussing the 9 meaning of Great-West and making clear that an ERISA fiduciary may 10 pursue "specifically identifiable" funds that are "within the 11 possession and control" of a plan beneficiary). 12 must be relief possession must not of be the disputed attempting to funds; impose (2) the personal Id.; see also Sereboff v. Mid Atlantic Plaintiff here argues that all four Great-West criteria are 13 met in this case. 14 defendant (or more precisely, in an identified trust account with 15 her attorney). 16 Plaintiff 17 defendant. And, finally, plaintiff contends that the money belongs 18 to it in good conscience under the terms of the plan. does The disputed funds are in possession of The disputed funds have not been dissipated. not attempt to impose personal liability on 19 Only the fourth element merits discussion. Plaintiff noted in 20 its written materials, and stressed again at oral argument, that 21 plaintiff's constructive trust ERISA claim mirrors O.R.S. 742.538. 22 Plaintiff agreed that state statutes regarding insurance are to be 23 considered by the Court in equity in determining the propriety of 24 awarding a constructive trust because, according to plaintiff, 25 under the terms of the plan, plaintiff has the right to recover the 26 disputed funds to the maximum extent permitted by law. 27 Mem. in Sup. of Pltf's MSJ at p. 6 (arguing, in support of ERISA 28 claim, that "[t]here is no question that, under the language of the 11 - OPINION & ORDER See Pltf's 1 Plan, Providence has a right to recover the full value of the 2 medical expenses Providence paid for Charriere's treatment, to the 3 maximum extent permitted by law, . . . ."). 4 that in this ERISA claim, it seeks rights consistent with O.R.S. 5 742.538 and does not seek anything more or less than what that 6 statute allows. Plaintiff makes clear 7 Defendant contends that plaintiff is not entitled to the 8 disputed funds under state insurance statutes and thus, plaintiff 9 cannot successfully argue that in equity, the money belongs to 10 plaintiff in good conscience. 11 agree with defendant as to the $50,000 in third-party liability 12 funds paid by State Farm on behalf of Arthur. 13 defendant, and agree with plaintiff, as to the $50,000 paid by 14 State Farm in UIM coverage. 15 A. 16 The 17 18 19 20 21 22 23 24 25 26 For the reasons explained below, I I disagree with Relevant State Statutes first statute interinsurer reimbursement. concerns direct reimbursement, It provides: (1) Except as provided in ORS 742.544 [addressing reimbursement to a provider of personal injury protection benefits and not at issue here], every authorized motor vehicle liability insurer whose insured is or would be held legally liable for damages for injuries sustained in a motor vehicle accident by a person for whom personal injury protection benefits have been furnished by another such insurer, or for whom benefits have been furnished by an authorized health insurer, shall reimburse such other insurer for the benefits it has so furnished if it has requested such reimbursement, has not given notice as provided in ORS 742.536 that it elects recovery by lien in accordance with that section and is entitled to reimbursement under this section by the terms of its policy. Reimbursement under this subsection, together with the amount paid to injured persons by the liability insurer, shall not exceed the limits of the policy issued by the insurer. 27 28 (2) In calculating such reimbursement, the amount of benefits so furnished shall be diminished in proportion 12 - OPINION & ORDER or 1 2 to the amount of negligence attributable to the person for whom benefits have been so furnished, and the reimbursement shall not exceed the amount of damages legally recoverable by the person. 3 4 (3) Disputes between insurers as to such issues of liability and the amount of reimbursement required by this section shall be decided by arbitration. 5 6 (4) Findings and awards made in such an arbitration proceeding are not admissible in any action at law or suit in equity. 7 8 9 (5) If an insurer does not request reimbursement under this section for recovery of personal injury protection payments, then the insurer may only recover personal injury protection payments under the provisions of ORS 742.536 or 742.538. 10 O.R.S. 742.534. 11 The next statute, O.R.S. 742.536, addresses liens. It is not 12 at issue in the case. 13 The third statute, O.R.S. 753.538, addresses subrogation: 14 15 16 17 18 19 20 21 22 If a motor vehicle liability insurer has furnished personal injury protection benefits, or a health insurer has furnished benefits, for a person injured in a motor vehicle accident, and the interinsurer reimbursement benefit of ORS 742.534 is not available under the terms of that section, and the insurer has not elected recovery by lien as provided in ORS 742.536, and is entitled by the terms of its policy to the benefit of this section: (1) The insurer is entitled to the proceeds of any settlement or judgment that may result from the exercise of any rights of recovery of the injured person against any person legally responsible for the accident, to the extent of such benefits furnished by the insurer less the insurer's share of expenses, costs and attorney fees incurred by the injured person in connection with such recovery. 23 24 25 26 (2) The injured person shall hold in trust for the benefit of the insurer all such rights of recovery which the injured person has, but only to the extent of such benefits furnished. 27 (3) The injured person shall do whatever is proper to secure, and shall do nothing after loss to prejudice, such rights. 28 (4) If requested in writing by the insurer, the injured 13 - OPINION & ORDER 1 2 3 4 5 6 7 8 person shall take, through any representative not in conflict in interest with the injured person designated by the insurer, such action as may be necessary or appropriate to recover such benefits furnished as damages from such responsible person, such action to be taken in the name of the injured person, but only to the extent of the benefits furnished by the insurer. In the event of a recovery, the insurer shall also be reimbursed out of such recovery for the injured person's share of expenses, costs and attorney fees incurred by the insurer in connection with the recovery. (5) In calculating respective shares of expenses, costs and attorney fees under this section, the basis of allocation shall be the respective proportions borne to the total recovery by: 9 (a) Such benefits furnished by the insurer; and 10 (b) The total recovery less (a). 11 12 13 14 15 16 17 (6) The injured person shall execute and deliver to the insurer such instruments and papers as may be appropriate to secure the rights and obligations of the insurer and the injured person as established by this section. (7) Any provisions in a motor vehicle liability insurance policy or health insurance policy giving rights to the insurer relating to subrogation or the subject matter of this section shall be construed and applied in accordance with the provisions of this section. O.R.S. 742.538. 18 In State Farm Mutual Automobile Insurance Co. v. Hale, 215 Or. 19 App. 19, 168 P.3d 285 (2007), the Oregon Court of Appeals distilled 20 the required elements of recovery for a health insurer under O.R.S. 21 742.534 and O.R.S. 742.538. 22 explained that the statute allows an insurer to recover its PIP1 23 payments 24 "'entitled to reimbursement under this section by the terms of its 25 policy'"; (2) the insurer has "'not given notice as provided in ORS if three conditions As to O.R.S. 742.534, the court were met: (1) the insurer is 26 27 28 1 The insurance issue in Hale concerned PIP payments. Both O.R.S. 742.534 and O.R.S. 742.538 apply equally to payments made by a health insurer. 14 - OPINION & ORDER 1 742.536 that it elects recovery by lien in accordance with that 2 section'"; 3 reimbursement.'" 4 (quoting O.R.S. 742.534). 5 As and to (3) the insurer "'has requested such Hale, 215 Or. App. at 27, 168 P.3d at 290 O.R.S. 742.538, the Hale court explained that 6 reimbursement of health benefits may be recovered under that 7 statute when three conditions are met: 8 entitled by the terms of its policy' to such benefits"; (2) the 9 insurer "'has not elected recovery by lien as provided in ORS 10 753.536'"; and (3) "the interinsurer reimbursement benefit of ORS 11 742.534 is not available under the terms of that section.'" 12 26-27, 168 P.3d at 289 (quoting O.R.S. 742.538) (emphasis added in 13 Hale). (1) the insurer "'is Id. at 14 It is clear that the statutes give PIP insurers and insurers 15 who have provided health benefits, three separate ways to recover 16 the sums they have provided to an injured insured. 17 clear that they are ordered such that O.R.S. 742.534 establishes 18 the least costly and burdensome method for the insurer to recover 19 because it requires only a request for interinsurer reimbursement 20 and then provides for arbitration if there is a dispute. 21 O.R.S. 742.536. 22 provided 23 straightforward because under it, the insurer places a lien on the 24 recovery obtained by the injured insured. 25 provision of O.R.S. 742.538, which essentially provides the insurer 26 with the subrogation rights it has at common law. 27 structure and substance of the code provisions, the Legislature has 28 intended O.R.S. 742.538 to be the insurers' last resort. for It is also Second is While a bit more burdensome than the recovery in 15 - OPINION & ORDER O.R.S. 742.534, it is still relatively Third is the fallback Considering the 1 The Legislature also codified these statutes with liability 2 insurance in mind. 3 reimbursement/recovery statutes for PIP and health insurers to 4 recover sums owed by liability insurers. 5 detail below, O.R.S. 742.534 does not cover a reimbursement request 6 made to an insurer other than a liability insurer. 7 742.538 was similarly not designed to apply to recoveries sought 8 from non-liability insurers, the language used in that statute is 9 broad enough to allow a PIP or health care insurer to seek payment 10 That is, the Legislature considered these As explained in more While O.R.S. from a UIM insurer for sums paid to an injured insured. 11 B. 12 Plaintiff maintains that it is owed the disputed monies paid 13 to defendant by State Farm under an ERISA equitable constructive 14 trust theory because the plan, consistent with O.R.S. 742.538, 15 entitles it to seek these funds from defendant and thus, the 16 monies, in good conscience, belong to plaintiff. 17 from the statutory language, and as explained in Hale, O.R.S. 18 742.538 allows plaintiff to recover the health benefits paid if it 19 is entitled to reimbursement under its plan, it has not given 20 notice under O.R.S. 742.536 that it elects recovery by lien, and 21 the interinsurer reimbursement provision of O.R.S. 742.534 is not 22 available "under the terms of that section." 23 Third-Party Bodily Injury Coverage As can be seen Plaintiff's plan provides for the reimbursement plaintiff 24 seeks here, to the maximum allowed by law. 25 the 26 referring to "the fullest extent permitted by law," and "the 27 maximum extent permitted by law"). 28 under Plan (addressing O.R.S. 742.536. 16 - OPINION & ORDER proceeds Thus, of See Section 8.4.2 of settlement or recovery and Plaintiff has not given notice the issue here is whether the 1 interinsurer reimbursement provision of O.R.S. 742.534 is available 2 or not available under the terms of that section. 3 Defendant argues that the Oregon Court of Appeals answered 4 this question in defendant's favor in Mid-Century Insurance Co. v. 5 Turner, 219 Or. App. 44, 182 P.3d 855 (2005). 6 that under Mid-Century, when an insurer elects to proceed under an 7 interinsurer reimbursement agreement pursuant to O.R.S. 742.534, it 8 is foreclosed from pursuing reimbursement under O.R.S. 742.536 or 9 742.538. Defendant suggests 10 I agree with plaintiff that the holding of Mid-Century is not 11 as broad as defendant contends, and that it is distinguishable from 12 the instant case for several reasons. First, the plaintiff in Mid- 13 Century was not bringing an ERISA claim, but a breach of contract 14 claim grounded in the novel theory that the defendant's acceptance 15 of a settlement directly from the liability insurer prejudiced the 16 plaintiff's ability to secure interinsurer reimbursement from the 17 liability insurer under O.R.S. 742.534. 18 858. 19 the applicable policy language. 20 the policy language supports plaintiff's right to reimbursement as 21 long as it is consistent with the law. Id. at 48, 192 P.3d at Second, the court held that the claim was not supported by Id. at 57, 182 P.3d at 862. Here, 22 Third, the court explained that even if the plan could be 23 interpreted to support an obligation to reimburse the plaintiff, it 24 was unenforceable as being less favorable to insureds than the form 25 provisions prescribed by the Insurance Code. 26 at 863-64 (citing O.R.S. 742.021(1)). 27 O.R.S. 742.021 does not apply to it as a health insurer. 28 while the defendant prevailed in Mid-Century, and the plaintiff 17 - OPINION & ORDER Id. at 58, 182 P.3d As plaintiff here notes, Thus, 1 insurer could not seek reimbursement directly from the defendant 2 after the plaintiff had sought interinsurer reimbursement under 3 O.R.S. 742.534, the holding is limited to the facts in that case. 4 The Mid-Century court made no blanket statement regarding the 5 relationship of the relevant insurer reimbursement statutes in all 6 situations where an insurer has paid its limits to an insured. 7 Furthermore, Hale left the question raised in this case 8 unresolved. The court there stated that it need not reach the 9 question of whether interinsurer reimbursement under O.R.S. 753.534 10 remained "available" 11 proceeding under O.R.S. 742.538, when the other insurer has paid 12 its policy limits directly to an insured. 13 24, 168 P.3d at 288; see also Mid-Century, 219 Or. App. at 56 n.4, 14 182 P.3d at 862 n.4 (remarking that the Hale court noted, but did 15 not 16 interinsurer 17 subrogation under ORS 742.538"). decide, "question and of reimbursement thus, whether under prohibited an insurer from Hale, 215 Or. App. at an insurer who has sought ORS 742.534 may later seek 18 In Hale, the court noted that the settlement documents between 19 the injured insured and the third-party tortfeasor's motor vehicle 20 liability 21 attempted to assert its subrogation rights under O.R.S. 742.538. 22 Thus, at that time, the settlement of the claim by the injured 23 party against the tortfeasor's motor vehicle liability carrier had 24 not occurred. As a result, the court concluded that interinsurance 25 reimbursement remained "available" under O.R.S. 742.534, rendering 26 subrogation under O.R.S. 742.538, unavailable. 27 at 24, 168 P.3d at 288. 28 carrier had not been executed when the plaintiff Hale, 215 Or. App. The record here shows that plaintiff attempted to invoke its 18 - OPINION & ORDER 1 rights under O.R.S. 2 writing letters to State Farm expressly referencing the statute and 3 asserting its claim thereunder. 4 statute, a request by a health insurer to the authorized motor 5 vehicle liability insurer is discretionary, not mandatory. 6 statute 7 reimbursement directly from the motor vehicle liability insurer 8 whose insured is or would be held legally liable for damages. 9 O.R.S. gives the 742.534(1) 742.534 health (the to interinsurer by Under subsection (1) of the insurer motor reimbursement the vehicle option liability of The requesting insurer See shall 10 reimburse the health insurer if the health insurer has requested 11 such reimbursement). 12 Nothing in the statute or the caselaw indicates that payment 13 by the motor vehicle liability carrier to the insured person makes 14 the 15 "unavailable." Subsection (3) provides for arbitration of disputes 16 between insurers regarding "the amount of reimbursement required by 17 this 18 section" refers to payment from the motor vehicle liability carrier 19 to the health carrier (or to the PIP carrier), the language in 20 subsection (3) regarding "the amount of reimbursement required by 21 this section" clearly includes the question of to whom the motor 22 vehicle liability carrier should pay the amount owed under the 23 bodily injury policy. 24 arbitration section." proceeding Because set the forth in O.R.S. "reimbursement 742.534(3), required by this Given that plaintiff still has arbitration available to it 25 under O.R.S. 26 reimbursement. 27 Because plaintiff elected to pursue reimbursement under O.R.S. 28 742.534, the 742.534, it cannot rely on O.R.S. 742.538 for Nothing in Hale or Mid-Century suggests otherwise. statute's 19 - OPINION & ORDER arbitration provision, while perhaps 1 unlikely to produce funds, remains available and plaintiff may not 2 rely on O.R.S. 742.538. 3 conscience" entitled to the $50,000 paid by State Farm to defendant 4 under Arthur's motor vehicle bodily injury policy. As a result, plaintiff is not, in "good 5 C. UIM Coverage 6 Notably, the plain language of O.R.S. 742.534 shows that 7 interinsurer reimbursement is not available for UIM coverage paid 8 to the injured insured. 9 health insurer, if The statute requires reimbursement to a requested by the health insurer, from an 10 "authorized motor vehicle liability insurer whose insured is or 11 would be held legally liable for damages for injuries sustained in 12 a motor vehicle accident . . . ." 13 added). 14 insurance policy, not Arthur's. 15 Farm's insured for UIM payments. 16 insured who is or would be held legally liable for her own damages 17 sustained in the accident. 18 own injuries. 19 insurer of the insured who is "legally liable for damages for 20 injuries sustained" is the insurer of the third-party tortfeasor 21 under a liability policy. O.R.S. 742.534(1) (emphasis Defendant received UIM benefits as a result of her own Defendant, not Arthur, was State Defendant, however, is not an Defendant is not responsible for her Under the plain language of O.R.S. 742.534, the 22 As a result, although plaintiff attempted to invoke its right 23 to interinsurer reimbursement under O.R.S. 742.534 for the UIM 24 coverage, 25 reimbursement because O.R.S. 742.534 does not apply to recovery of 26 payments made as UIM coverage. Accordingly, arbitration of the 27 disputed coverage 28 available under O.R.S. 742.534(3). it could $50,000 paid 20 - OPINION & ORDER not as have UIM succeeded to in obtaining defendant, is such not 1 Under O.R.S. 742.538, if interinsurer reimbursement under 2 O.R.S. 742.534 is unavailable under the terms of that section, the 3 insurer has not elected recovery under O.R.S. 742.536, and the 4 insurer is entitled, under its plan language, to the benefits of 5 O.R.S. 742.538, then the health insurer is entitled to the proceeds 6 of a settlement that results "from the exercise of any rights of 7 recovery 8 responsible for the accident . . . ." of the injured person against any person legally O.R.S. 742.538(1). 9 The language in subsection (1) of O.R.S. 742.538 regarding 10 "any person legally responsible for the accident" is similar, but 11 not 12 742.534(1) discussed above. 13 language of "any person legally responsible" as contrasted to the 14 "insured [who] is or would be held legally liable for damages" in 15 O.R.S. 734.534(1)). The broader language in O.R.S. 734.538(1) 16 applies other 17 carrier. identical, to to insurers the "legally liable" language in O.R.S. O.R.S. 734.538(1) uses the broader than the third-party tortfeasor's 18 Here, defendant is the injured person. The language in O.R.S. 19 742.538 indicates that the proceeds being discussed are based on 20 the exercise of the injured person's rights against another person 21 legally responsible. 22 her own policy, defendant must establish that her damages are 23 indeed caused by the fault of another. 24 Murphree, 242 F.3d 899, 903 (9th Cir. 2001) ("UIM coverage is 25 fault-based meaning that insured must establish a third party's 26 liability in tort to trigger coverage."). In order to receive the UIM proceeds under Boston Mut. Ins. v. 27 Considering the fault-based requirement for UIM in the context 28 of O.R.S. 742.538, it is clear that State Farm takes on the 21 - OPINION & ORDER 1 responsibility of "any person legally responsible for the accident" 2 by virtue of it providing UIM to defendant in the situation where 3 the third-party tortfeasor is underinsured. 4 of her rights as an injured person as to her UIM insurer places the 5 UIM insurer in the position of being legally responsible for the 6 third-party tortfeasor's conduct in causing the accident. 7 essence, 8 responsible for the accident and then seeks UIM coverage because 9 that third-party is underinsured, defendant's UIM insurer steps 10 when defendant shows that a Defendant's exercise third-party is In legally into the shoes of the tortfeasor's insurer. 11 Because interinsurer reimbursement under O.R.S. 742.534 is 12 unavailable 13 defendant in UIM coverage, and because plaintiff's request for this 14 $50,000 is consistent with what is allowed under O.R.S. 742.538, 15 this $50,000 belongs, in "good conscience," to plaintiff and, 16 subject to defendant's "unclean hands" and 17 defenses, and any offset for attorney's fees and costs, plaintiff 18 should be awarded $50,000, paid as UIM benefits, in a constructive 19 trust for its ERISA claim. 20 II. 21 to plaintiff for the $50,000 State Farm paid to "waiver" affirmative Unclean Hands and Waiver In her Answer, defendant raises affirmative defenses of 22 unclean hands and waiver. Deft's Answer at ¶¶ 19-23. Because they 23 are equitable defenses, I consider them only as to the equitable 24 ERISA claim. 25 Co., No. CV-07-1496-KI, 2008 WL 607415, at *1 (D. Or. Feb. 29, 26 2008) (defense of unclean hands is an equitable doctrine with no 27 application to a claim at law); Thompson v. Coughlin, 329 Or. 630, 28 633, 997 P.2d 191, 192 (2000) (noting that affirmative defenses of Del Monte Fresh Produce, N.A., Inc. v. H.J. Heinz 22 - OPINION & ORDER 1 unclean hands, waiver, and estoppel are equitable defenses); see 2 also California Dep't of Toxic Substances Control v. Neville Chem. 3 Co., 358 F.3d 661, 672-72 (9th Cir. 2004) (describing affirmative 4 defenses of waiver and estoppel as equitable defenses). 5 A. 6 To prevail on an unclean hands defense, defendant must show 7 that "the plaintiff's conduct is inequitable and that the conduct 8 relates to the subject matter of its claims." 9 Inc. v. Jardine, 318 F.3d 900, 909 (9th Cir. 2003) (internal 10 quotation omitted). In the "clean hands doctrine" "equity requires 11 that those seeking its protection shall have acted fairly and 12 without fraud or deceit as to the controversy in issue." Ellenburg 13 v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir. 1985). 14 Unclean Hands Defendant maintains that plaintiff Brother Records, unfairly, without 15 justification, and in contravention of the plan, terminated health 16 benefits owed to defendant. 17 plaintiff has unclean hands, precluding plaintiff from obtaining 18 any relief in its ERISA claim. As a result, defendant contends, 19 Defendant, however, fails to create the necessary, or any, 20 factual record in support of its unclean hands affirmative defense. 21 Defendant argues in her memorandum opposing plaintiff's motion for 22 summary 23 defendant under the plan. 24 3-4. 25 off benefits for treatment related to the motor vehicle accident. 26 . . . According to Ms. Warren, the only basis for which benefits 27 were terminated was that she had received a settlement." 28 4. judgment that plaintiff terminated benefits owed to Deft's Mem. in Opp. to Pltf's MSJ at pp. Defendant asserts that "Warren made the determination to cut 23 - OPINION & ORDER Id. at p. 1 As support, defendant, in her memorandum, quotes from pages 95 2 and 96 of Warren's deposition. 3 however, is that pages 95 and 96 of Warren's deposition appear 4 nowhere in 5 Warren's deposition testimony does not make it so. 6 authentication of a deposition excerpt is required to create an 7 issue of fact in opposition to a summary judgment motion. 8 v. Bank of America, NT & SA, 285 F.3d 764, 774 (9th Cir. 2002) 9 (explaining the record. that a Id. at p. 4 n. 3 & 4. Defendant's properly assertion authenticated The problem, that this was Rather, the deposition See Orr excerpt 10 identifies the name of the deponent and the action, and requires, 11 in addition to the excerpt itself, the reporter's certification 12 that the deposition is a true record of the testimony of the 13 deponent). 14 Because there is no admissible evidence in the record showing 15 what benefits plaintiff paid, did not pay, and the timing of the 16 unpaid benefits, defendant fails to create an issue of fact as to 17 "unclean hands" sufficient to oppose plaintiff's summary judgment 18 motion on the ERISA claim. 19 B. Waiver 20 Defendant's waiver argument is that plaintiff elected to limit 21 its recovery to whatever remedies might exist under Oregon state 22 law and thus, waived any rights of equitable recovery existing 23 under federal law. 24 defendant contends that by virtue of citing O.R.S. 742.534 in its 25 letters to State Farm, plaintiff elected to pursue a recovery of 26 the sums it paid as health benefits on behalf of defendant, only 27 under 28 available means of recovery under ERISA. state law Deft's Answer at ¶¶ 22-23. and 24 - OPINION & ORDER is thus precluded As I understand it, from asserting other 1 Defendant cites no law in support of this position. Rather, 2 defendant appears to rely solely on its interpretation of the 3 Oregon statutes as articulated above. According to defendant, once 4 an insurer seeks interinsurer reimbursement under O.R.S. 742.534, 5 that insurer may not pursue reimbursement under O.R.S. 742.536 or 6 O.R.S. 742.538 after a settlement has been paid to the injured 7 party on whose behalf PIP or health benefits have been paid. 8 There are at least two problems with defendant's position. 9 First, as explained in the analysis above, I reject defendant's 10 legal argument as to the $50,000 paid in UIM coverage because those 11 funds were not subject to recovery by plaintiff under O.R.S. 12 742.534. 13 Oregon 14 statutes, or caselaw indicates that plaintiff's attempt to recover 15 the sums it paid on defendant's behalf directly from the motor 16 vehicle liability insurer, forfeits plaintiff's right to proceed 17 with any available claim it may have by virtue of being an ERISA 18 fiduciary. Second, even if defendant correctly interpreted the insurance statutes, nothing in those statutes, other 19 In a somewhat analogous case, Judge Haggerty recently rejected 20 the defendant's argument that ERISA preemption was inappropriate 21 because the plaintiff insurer had initially asserted its right to 22 reimbursement under Oregon statute, particularly O.R.S. 742.536, in 23 a letter. Providence Health Plans of Or. v. Simnitt, No. CV-08-44- 24 HA, 2009 WL 700873, at *4 (D. Or. Mar. 13, 2009). 25 the issue as one of judicial estoppel, Judge Haggerty concluded 26 that mentioning the Oregon statute in a letter sent nearly two 27 years before litigation began, was an insufficient basis for 28 estopping the plaintiff from arguing that the Oregon statutes were 25 - OPINION & ORDER There, analyzing 1 preempted by ERISA. 2 Id. The waiver defense is not an impediment to plaintiff's summary 3 judgment motion on the ERISA claim. 4 III. Breach of Contract Claim 5 Under Providence Health Plan v. McDowell, 385 F.3d 1168, 1172 6 (9th Cir. 2004), plaintiff may maintain a separate, state law 7 breach of contract claim, not preempted by ERISA. 8 contends that defendant has breached her obligations under the plan 9 to reimburse plaintiff, from the State Farm settlement proceeds, 10 for the health benefits plaintiff provided to defendant as a result 11 of the accident. Plaintiff 12 In particular, plaintiff relies on Section 8.4 of the plan, 13 quoted above, addressing third-party liability and subrogation. As 14 with the 15 contract claim is consistent with state insurance law, particular 16 O.R.S. 742.538. 17 the proceeds of a settlement or a recovery, specifically gives the 18 plan rights consistent with the law. ERISA claim, plaintiff contends that its breach of And, as indicated above, section 8.4.2, regarding 19 Although O.R.S. 742.021, which requires property and casualty 20 insurance policies to carry provisions substantially similar to 21 statutory requirements, and provisions that are not less favorable 22 to the insured, does not apply to plaintiff as a health insurer, 23 O.R.S. 742.538 itself provides that "[a]ny provisions in a . . . 24 health insurance policy giving rights to the insurer relating to 25 subrogation 26 construed and applied in accordance with the provisions of this 27 section." 28 or the subject matter of this section shall be O.R.S. 742.538(7). Given that the breach of contract claim is premised on O.R.S. 26 - OPINION & ORDER 1 742.538, the analysis explained above in regard to the ERISA claim 2 is equally applicable to this claim. 3 the plan provisions as to the $50,000 she received from State Farm 4 on behalf of its insured Arthur as liability coverage, because 5 under O.R.S. 742.538, plaintiff cannot seek that $50,000 from 6 defendant as long as interinsurer reimbursement remains available 7 under O.R.S. 742.534. 8 reimbursement remains available as to the bodily injury coverage of 9 $50,000. Defendant has not breached For the reasons explained above, such 10 Defendant has, however, breached the plan as to the $50,000 11 she received from State Farm in UIM coverage. Because interinsurer 12 reimbursement under O.R.S. 742.534 is not available to plaintiff 13 for that money, it may, consistent with O.R.S. 742.538, enforce the 14 plan provisions requiring defendant to reimburse the proceeds of 15 that 16 plaintiff on the breach of contract claim, in part. 17 IV. settlement to plaintiff. I grant summary judgment to Offset for Costs & Fees 18 Under the plan, defendant is entitled to an offset for "out of 19 pocket expenses" from any recovery of settlement proceeds by 20 plaintiff. 21 the benefits provided by Us for the condition, calculated using Our 22 UCR charges for such Services, less the Member's out of pocket 23 expenses.") 24 contemplates 25 "transactional costs of litigation[.]" 26 at 58, 182 P.3d at 864 (citing O.R.S. 742.538(1), (4), (5)). Section 8.4.2 ("We are entitled up to the full value of (emphasis that the omitted). insured Additionally, and the insurer O.R.S. share 742.538 in the Mid-Century, 219 Or. App. 27 Consistent with plaintiff's position that its equitable claim 28 mirrors O.R.S. 742.538, the "good conscience" determination that 27 - OPINION & ORDER 1 the $50,000 in UIM benefits paid to defendant more appropriately 2 belongs to plaintiff, requires that any attorney's fees or costs 3 defendant incurred in obtaining that $50,000 be deducted from the 4 constructive trust award. 5 contract claim is based on the plan language, an offset to the 6 damages awarded under that claim is also required. 7 Additionally, because the breach of The problem here is that neither party submits reliable, 8 admissible evidence on this issue. In her declaration in support 9 of plaintiff's summary judgment motion, Warren states that State 10 Farm agreed to pay both the $50,000 bodily injury liability policy 11 and the $50,000 in UIM coverage to defendant before defendant 12 retained an attorney and thus, any attorney fees and expenses 13 defendant incurred were for the purpose of resisting plaintiff's 14 efforts to seek reimbursement from defendant. 15 11. 16 knowledge of when defendant retained counsel or how Warren has 17 personal knowledge of the date on which State Farm agreed to make 18 the payments to defendant. 19 testimony in the record on which I can evaluate Warren's personal 20 knowledge. Warren Declr. at ¶ Plaintiff provides no explanation of how Warren has personal There is also no obvious exhibit or 21 Defendant similarly submits no admissible evidence revealing 22 when she hired counsel and the purpose for which she hired counsel. 23 Defendant states, in a legal memorandum, that her attorney was 24 required to file a lawsuit in the underlying case. 25 Mem. in Sup. of Deft's MSJ at p. 8. 26 in support of this assertion, and more importantly, she offers no 27 evidence revealing when she hired counsel. 28 fact assertion, defendant maintains that she was forced to hire an 28 - OPINION & ORDER Deft's Reply Defendant offers no evidence Also, in a responsive 1 attorney to protect her rights of recovery against the at-fault 2 driver and her own insurance company. 3 at ¶ 2. 4 assertion and offers no evidence of when her relationship with 5 counsel began. 6 Deft's Resp. to Pltf's CSF Defendant again cites no evidence in support of this With this record, I can make no determination regarding the 7 propriety of a setoff for attorney's fees and costs. 8 parties are unable to resolve the issue, the trier of fact will 9 resolve it. 10 11 If the CONCLUSION Plaintiff's motion for summary judgment (#33) is granted in 12 part and denied in part. 13 (#32) is granted in part and denied in part. 14 Defendant's motion for summary judgment IT IS SO ORDERED. 15 Dated this 13th day of October , 2009. 16 17 18 /s/ Dennis James Hubel Dennis James Hubel United States Magistrate Judge 19 20 21 22 23 24 25 26 27 28 29 - OPINION & ORDER
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